NEWS

6 Mar, 2014

NEW DELHI: India has called for a review of the US whistleblower policy as it feels that the generous incentives offered by the US drug regulator to employees for revealing malpractices in their companies may encourage disgruntled executives to tamper with data to use against their employers.

"We feel the whistleblower policy may be suitably reviewed to avoid a possible misuse of it just to earn high rewards," said a government official. The government has, in a 'non-paper' issued to the US Food and Drug Administration, said some aggrieved employees may fudge data in the hope of reaping huge rewards. A non-paper is an informal paper to discuss sensitive issues without elevating it to a formal or final position.

Under the False Claims Act of the US federal law, whistleblowers stand to receive as much as 15-25% of the recovered damages that go to the federal government.

About 70% of all US government false claim actions are initiated by whistleblowers today. Dinesh Thakur, the former RanbaxyBSE 1.03 % executive who gave proof to USFDA about wrongdoing in India's largest drug maker and who pocketed $48 million after the company admitted to its transgressions and paid a $500 million fine, is the most high profile example of a whistleblower in the Indian pharmaceutical industry. There is no evidence to suggest that Thakur's testimony was incorrect. The government's call for a review in the US whistleblower policy appears to have been prompted by complaints from some companies who fear that some disgruntled executives — present or former — could plant false evidence with the regulator.

Senior Ranbaxy executives had earlier this year briefed government officials about the possibility of a few aggrieved employees being responsible for the problems at one of its manufacturing facilities in Punjab after the USFDA had blacklisted its Toansa plant. A top Ranbaxy executive later said the company did not support the sabotage theory.

The relationship between the US drug regulator and the Indian pharma industry has worsened over the last few years. Top Indian drugmakers such as Ranbaxy and WockhardtBSE 1.92 % are being investigated for manufacturing and quality violations by USFDA, which has increased its scrutiny of local firms in the recent past. In 2013, Indian drugmakers accounted for over half of the warning letters issued by the FDA's drug safety office.

Indian companies, on their part, have complained that they are being treated harshly by the FDA, a point echoed by the government's non-paper, which said the penalties being imposed by the US drug regulator are perceived as 'disproportionate' by the industry.

In the non-paper, India also asked the US to consider the possibility of scaling down the user fee for generic drug exporters, which it imposed in 2012, as these were inflating operating costs of Indian companies. "The high fee may lead to increased costs for the US patients," said the government official.

The non-paper has also sought the provision of personal hearing for Indian drugmakers with USFDA investigators who slap them with Form 483. This form contains adverse observations made by the FDA investigating team at the end of their inspection and forms the basis of future action by the regulator, which includes imposing a ban on export or production from a particular manufacturing facility.

The government has also raised the issue of delay in receiving observations under Form 483 after the FDA audit as it disturbs the business strategy of Indian drug firms.

During USFDA chief Margaret Hamburg's visit to New Delhi last month, commerce and industry minister Anand Sharma had brought to her notice the fact that often audit inspections were not followed by a discussion with the companies and harsh decisions were taken even before receiving clarifications.